Chamber alleges breach of contract, seeks $459K

The organization claims that it is entitled to a full year’s notice before its contract with the county can be terminated.

Washington County’s split with its longtime economic development partner took another turn this week as the Washington County Chamber of Commerce formally demanded the county pay nearly $460,000, accusing commissioners of breaching their contract.

In a letter delivered Thursday to Commissioner Nick Sherman, who chairs the board, the chamber requested “full and immediate payment” of $459,079, saying the county failed to provide the one year’s notice required to end the agreement.

Commissioners Sherman and Electra Janis voted Nov. 7 to terminate the deal effective Jan. 1, giving 51 days’ notice instead. Fellow commissioner Larry Maggi voted against the move.

Maggi said Thursday he is concerned that the county is now facing litigation because of the decision.

“With my colleagues abruptly cancelling the economic development contract with the chamber without the agreed upon one year’s notice, county taxpayers are now faced with the potential of paying $460,000 in damages for the county violating the contract we agreed upon,” Maggi said. “All this could have been prevented by communication and an interest in working together with the business community as we have for over 26 years.”

He said Washington County now has the negative distinction of being the only county in Pennsylvania with absolutely no program to attract jobs, companies or small businesses.

“My colleagues are throwing away over 26 years of contacts, relationships and success with the private sector with no plans to replace it,” he said.

In its letter, the chamber argued that short window violates the terms the county agreed to when renewing the multi-year pact for job creation and economic development services.

Chamber President Jeff Kotula said the county’s shortened timeline leaves Washington County on the hook for the remainder of the multi-year agreement.

“The Chamber delivered a letter today to Commissioner Sherman, as Chairman of the Board of Commissioners, informing him of the County’s breach of its contractual responsibility to provide the Chamber with one year’s notice prior to termination of the Contract,” Kotula said in a statement. “In the contract, the County acknowledges that the Chamber had to hire and retain qualified staff as well as lease office space to fulfill its obligations under the contract.

“As Commissioners Sherman and Janis hastily voted to cancel the contract without providing the Chamber with this agreed upon notice, the Chamber is now requesting full and immediate payment of $459,079 to satisfy the County’s remaining commitment.

“Due to their violation, we are certain the commissioners will honor the amount remaining on the Contract to avoid litigation.”

The demand comes less than two weeks after the commissioners voted 2-1 to end the county’s 26-year relationship with the chamber.

At the time, Sherman and Janis pointed to budget concerns, a lack of measurable return on investment, communication issues and questions about whether counties can enter multi-year agreements for government services.

After the letter was sent Thursday, Kotula pushed back against every claim previously made before the contract was terminated.

“For the 26-year history of the County’s relationship with the Chamber, the County received no state or federal funds which it then paid for services under the contract and no other county contracts were cancelled for the same reason, so for the County to blame the Pennsylvania State Legislature and Federal Government for the cancellation of the Contract is totally without merit,” Kotula said. “The Chamber also disagrees that performance was ever a concern. Last year alone, the County provided us with $140,000 under the contract for our economic development services and we are proud that we returned $35.5 million to the County in new jobs and business growth.

“That is a great return on investment for the taxpayers.”

Kotula also disputed the commissioners’ claim that counties cannot be bound by multi-year contracts, saying the issue has already been settled in court.

“The commissioners are confused between multi-year contracts for government services such as law enforcement and public safety, and proprietary contracts which are for services that the private sector performs such as economic development,” he said. “Courts have consistently ruled that contracts for proprietary services like economic development can be multi-year and therefore binding.”

Kotula pointed to a recent case the commissioners lost involving the Washington County Tourism Promotion Agency.

“Earlier this year, the commissioners initiated litigation with the Pennsylvania Office of Open Records against the Washington County Tourism Promotion Agency arguing, in part, that the PA Right to Know Law applied to the agency because tourism promotion and economic development services are government functions,” he said. “The Office of Open Records ruled against the commissioners, stating that courts have decided that tourism promotion and economic development are not government functions.

“Based on the County losing the tourism case just a few months ago, Commissioners Sherman and Janis know full well that economic development is not a government function, and that our multi-year Contract is valid and in force.”

County Solicitor Gary Sweat responded Thursday, saying he had a brief time to review the chamber’s letter.

“I have not had a chance to digest the letter, I quickly glanced at it, it was given to me just before the meeting today,” Sweat said. “My only response is that I viewed the agreement, the contract with the county as a multi-year contract to provide governmental services, primarily.

“And, multi-year contracts for governmental services are not legal for multiple years. In other words, the policy is, a prior board cannot bind a future board with long-term contracts. My position is that this was something that was not valid as a multi-year contract, and that it needed to be renewed or reviewed every year. In this case, the majority board of commissioners voted to terminate the contract Dec. 31 of this year.”

When asked if the contract in question had been reviewed or renewed on an annual basis since its inception, Sweat confirmed it had not.

Sweat took over as solicitor in January 2024 and said the contract was not something he was asked to review until this year. He said he began that review in May.

“My legal opinion is, it’s an invalid multi-year contract because it is primary geared toward providing governmental services. A proprietary service agreement can be multi-year, but again, in my opinion, proprietary is something that government officials and departments cannot do, like monitoring cell towers or broadband,” Sweat said.

“That is what proprietary means. Multi-years are enforceable but, in fact, this county has never been asked to enter in to a contract where they did not have a 30 day out. And this is a 10-year contract,” Sweat said.

Sweat went on to say he was not prepared to discuss the county’s potential defenses if litigation would move forward, but emphasized the chamber’s letter was not a lawsuit.

“I think it is enough to say that in a matter of law it is a multi-year contract for governmental services that should be renewed annually. It can’t be forced upon subsequent future boards. That is a general policy of municipal law and you will find that in school districts, townships and county government.”

Sweat said he could not comment on actions taken by previous boards before he became solicitor in 2024.

“We have gotten a letter, and they have made a demand for the balance of the contract and that is fine,” Sweat said.

“We will defend it appropri- ately when and if they file a lawsuit, but this letter is not a lawsuit. It’s a demand for payment because they think we breached the agreement, so we will see what happens.”

Kotula said he still hopes the county will reconsider and return to the original contract, arguing that taxpayers will pay more if the county builds its own economic development department.

“With Commissioners Sherman and Janis cancelling the contract, Washington County is now the only county in the state without a coordinated effort to attract jobs, assist local businesses with growth and expansion plans, and attract employers,” he said.

He added that replacing the chamber’s work would require “hiring additional County employees to manage it, which would cost the taxpayers even more of their money.”

Washington County Public Affairs Director Patrick Geho did not respond to requests for comment on behalf of commissioners Sherman or Janice ahead of press time.